Fraud investigations could lead to the loss of employees in a few ways. First, one loss could be an employee who might have been involved in the fraud. That employee may choose to leave the company once he/she finds out they are under investigation or that a fraud investigation is taking place regarding an area of the business in which they work. That employee may also be fired once the investigation is complete if that is what the business decides is best to do. Second, the business could also lose employees not involved in the fraud simply because fraud investigations often make people uneasy and nervous. It can wear on the employees and bring down morale, so some may leave to avoid those issues. Third, if a fraud investigation is leaked to the press, it may provide bad publicity that could in turn cause customers to be wary of doing business with that given company. It could force a company to have to make labor cuts to their work force if things got too bad.
As for whether or not pursuing punishment in a fraud investigation, a business needs to take into account the value of that punishment over the value of the losses incurred from the fraud as well as the investigation and prosecution costs. Being that fraud investigations are not generally an inexpensive process due to the length of time it takes to complete them, often I think that pursuing prosecution would not make the most sense in terms of a good business decision. Ethically, I feel that the fraudster should most definitely be prosecuted.
Often, victims are very angry about being target of such fraudulent acts. Sometimes victims let their anger get the best of them when making decisions regarding the investigation. Many times, the victim wants to go and confront the fraudster right away. This is not a good idea. Fraud investigation need to be kept as quiet as possible in order to gather as much information as possible regarding the fraudulent acts. An investigator needs to have all the facts and figures related to the fraud before the company goes to confront the fraudster, so that it will be harder for the fraudster to deny. This information will also be needed for insurance and prosecution purposes and also, they may even be able to catch the fraudster in the act.